With the way the market is behaving, you may be tempted to pull money out of your 401(k) right now or greatly reduce your contributions. When you see your 401k continue to drop even though your adding money every paycheck, it may feel as if you are just throwing money away. If you’re considering stopping to contribute to your 401k, please reconsider it.
Don’t stop saving for retirement. Even if you think you’re wealthy enough to forego putting money in your 401(k), you could end up seriously shortchanging your retirement savings potential by reducing your retirement plan balance or elective salary deferrals.
A 401(k) plan is a great retirement savings vehicle – and the fact is that most Americans have not saved enough for their retirement years. Additionally, if you withdraw money from a 401(k) plan before age 59½, you’ll face a 10% tax penalty (with few exceptions) and you may end up spending money today that could have enjoyed tax-deferred compounding in the future.
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